The concept of asset management show fundamental differences in interpretation and usage. In essence is asset management about evaluating performance and making key decisions throughout an asset’s lifecycle (Sarfi and Tao, 2004). In other words, asset management enables organizations to allocate their assets (as resources) to provide the necessary levels of customer service, while balancing organizational objectives.
In doing so asset management is a useful strategic tool to accomplish business goals. The strategic aspects of asset management have been identified very early (see Miles et al., 1978), showing that new business strategies may fail due to inadequacy of asset management activities, systems, and technology. In most organizations is there no hard evidence or an inconsistency between strategic goals and the outcomes delivered. Furthermore, when accounting measures are considered, based on short-term financial performance and budgets, then the long-term (or lifecycle) value of asset utilization is missed (Kaplan, 1990; El-Akruti and Dwight, 2010).
Albeit the acknowledged key role of asset management in strategy making, the contribution of asset management activities to the development of an effective business strategy is still not defined (El-Akruti et al., 2013). A plausible reason may be that managers are unaware of, or unimpressed by, the contribution that asset management can offer.
The lack of advancement is due to the general belief that asset management is only related to maintenance and its related services and therefore is considered to be of less strategic importance (Too, 2010). The focus remains upon individual assets and their performance in the short-run rather that examining the long-term needs (Stapelberg, 2006). Most organizations utilize specific frameworks and guides on their individual assets, usually derived from the asset manufacturers, but their overall system management is usually developed empirically by their own practice and focus. Thus, there are many different perspectives on what “Asset Management” means to every different organization, according to their level of complexity, design and specific assets involved.
In order for the contribution of asset management to be effective, key activities, relationships, and mechanisms need to be managed inside an organization. In other words, in line with the organization’s strategy (Clash and Delaney, 2000). However, not so many organizations identify assets as being core to their success (Hodkiewicz, 2015).